One question many new (and sometimes even experienced) traders ask is whether it is a good idea to wait out a bad trade and let it finally return to profit rather than just let it close by a stop-loss?This question is totally normal and all traders probably wondered about this. However, the answer to it is almost always no. There are two problems with waiting out bad FX trades:It is likely that the exchange rate will never recover to level for your trade to become profitable. Not in a year, not even in 10 years. You could have bought USD/CHF at its high in October 2000, and you would still hold a massive loser of a trade 21 years later.You are missing potentially profitable opportunities to trade by keeping your margin locked — both to keep the trade active and to cover its floating loss. Besides, you would also be paying rollover fees every day to keep the position open.By not using a stop-loss, you do not realize your floating losses, improving your overall on-balance profitability. While in many cases, it will work well — you will successfully wait out negative periods to close trades with some profit, eventually, it will lead to "eternal" losing positions, which will be a huge drag on your account growth.Although, generally, it is a bad idea to wait out your losers, it is also necessary to mention that such technique can be a good choice in some specific cases:Non-leveraged stock or stock market index purchases. If you believe that the fundamentals are good for the stock's growth, there is no point in selling it. Such rationale rarely applies to Forex.Carry trades with large positive overnight swaps that can potentially outperform any exchange rate loss. In our age of near-zero interest rates, it doesn't look like a real possibility, but it is still a clear exception to the rule of 'no waiting out of bad trades.'THIS IS MY TOP 10 FOREX TOOLS THAT WILL HELP YOU IN FOREX https://bit.ly/2VsSZP4
Are you a forex trader or affiliate marketter that wants to trade forex or make money online.we have the best tips for you here.
Tuesday, 22 February 2022
One question many new (and sometimes even experienced) traders ask is whether it is a good idea to wait out a bad trade and let it finally return to profit rather than just let it close by a stop-loss?This question is totally normal and all traders probably wondered about this. However, the answer to it is almost always no. There are two problems with waiting out bad FX trades:It is likely that the exchange rate will never recover to level for your trade to become profitable. Not in a year, not even in 10 years. You could have bought USD/CHF at its high in October 2000, and you would still hold a massive loser of a trade 21 years later.You are missing potentially profitable opportunities to trade by keeping your margin locked — both to keep the trade active and to cover its floating loss. Besides, you would also be paying rollover fees every day to keep the position open.By not using a stop-loss, you do not realize your floating losses, improving your overall on-balance profitability. While in many cases, it will work well — you will successfully wait out negative periods to close trades with some profit, eventually, it will lead to "eternal" losing positions, which will be a huge drag on your account growth.Although, generally, it is a bad idea to wait out your losers, it is also necessary to mention that such technique can be a good choice in some specific cases:Non-leveraged stock or stock market index purchases. If you believe that the fundamentals are good for the stock's growth, there is no point in selling it. Such rationale rarely applies to Forex.Carry trades with large positive overnight swaps that can potentially outperform any exchange rate loss. In our age of near-zero interest rates, it doesn't look like a real possibility, but it is still a clear exception to the rule of 'no waiting out of bad trades.'THIS IS MY TOP 10 FOREX TOOLS THAT WILL HELP YOU IN FOREX https://bit.ly/2VsSZP4
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